Bitcoin Approaches $10,000 a piece(bbc.co.uk) |
Bitcoin Approaches $10,000 a piece(bbc.co.uk) |
Current market capitalization in US dollars:
Global M2 money supply over $90.0 trillion [a]
US dollar M2 money supply $13.8 trillion [b]
Euro M2 money supply $13.2 trillion [c]
All coins and banknotes in circulation $7.6 trillion [d]
All gold ever mined $7.1 trillion [e]
Bitcoin under $0.2 trillion [f]
Bitcoin has very different, unique characteristics compared to the other money-like assets on the list. For example, like gold, Bitcoin's continued existence doesn't depend on the good management of any national economy; however, unlike gold, bitcoins are digital so they can be encrypted, backed up, emailed, etc. Bitcoin is truly a new kind of money-like asset.
The trillion-dollar question is, to what extent does the world need a money-like asset with Bitcoin's unique characteristics to function in the 21st century?
[a] http://money.visualcapitalist.com/worlds-money-markets-one-v...
[b] https://fred.stlouisfed.org/series/M2
[c] http://sdw.ecb.europa.eu/reports.do?node=1000003501
[d] http://money.visualcapitalist.com/worlds-money-markets-one-v...
[e] https://www.fool.com/investing/2017/08/17/how-does-bitcoins-...
There is more or less the same places where to spend it as there was 4, 5 years ago. And they all have about the same traffic, which is nearly zero.
Most people only use it for speculation. This can't end well.
I also get paid in bitcoin thanks to bitwage. It's easier to get good (figurative) raises this way instead of depending on your boss x-) If you're wondering how the hell I'm so crazy to "bet" my salary on this, check this shower thought: https://www.reddit.com/r/Bitcoin/comments/79zy2d/shower_thou...
Is anyone else fatigued by repeating the same arguments over and over forever? If I just state them here once maybe we can talk about new ideas (pro or con, doesn't matter).
1) There are no "real" cryptocurrency transactions
2) It's all speculation
3) There's no intrinsic value
4) Tulips I say, TULIPS!
5) If you can't pay taxes with it, it's not "real money"
6) Governments will shut it down
7) Transactions aren't really private
8) Mining uses more energy than entire nations
9) Nobody will ever spend a deflationary currency
10) It's only useful for drugs, assassinations, gambling and ransoms
11) It doesn't scale, not enough transactions per second, blockchain will get too big
12) It's too volatile to be useful
13) Since the exchange rate keeps rising it's not useful for payments
14) Since I can't buy coffee with it it's not useful
15) Since fees are high it's not useful
16) It's a scam, Ponzi, pyramid
17) The "market cap" is (a) too small to be relevant, (b) evidence of a bubble
18) Will never completely replace gold / national currencies / corporations so there's no value
19) There are a lot of shady exchanges that (a) get hacked, (b) steal customer deposits, (c) are secretly insolvent
20) If the cryptography gets broken / bugs or exploits are discovered and the whole thing goes to zero
Maybe so many new people are just now getting involved that we keep rehashing a decade of stale thinking?
Let's talk about some new ideas!
I respectfully disagree with the idea that Bitcoin's killer-app is to be used as a currency for transactional purposes.
I can't really think of many reasons why you would use crypto to pay for a coffee or a sandwich if you live in the West (or frankly, even most developing nations).
On the other hand, I can definitely see the utility in a censorship-resistant digital medium to store wealth. To me, this latter use case has much, much more potential to serve the unbanked (as well as the banked).
Some use cases I can think off the top of my head:
(1) You are from Syria and need to flee war and escape into Europe – however bank transfers into Europe are almost impossible if you are a common Syrian. Bitcoin allows you to take your wealth with you, in your brain, as you escape across the border, by just memorising your twelve word private key.
(2) You are from Venezuela or Zimbabwe – The government has issued capital controls and is devaluing currency by the day. You transfer your wealth into Bitcoin in order to offset capital erosion due to hyper-inflation. When the situation stabilises, you transfer your Bitcoin back into fiat.
(3) You are Saudi billionaire Al-Waleed bin Talal. The government freezes all your assets in a political coup. If you have a portion of your wealth in Bitcoin, you could protect them from government expropriation and anonymously transfer them to associates or family members abroad.
(4) You are whistleblower Julian Assance and have been cut off from the financial system as a way to censor your speech. Bitcoin allows you to have an unbreakable digital "Swiss bank account" that the authorities are not able to reach.
This reminds me of Peter Thiel's recent words about Bitcoin: "it's like a reserve form of money, it's like gold, and it's just a store of value. You don't need to use it to make payments."
Reference
[1]: https://www.cnbc.com/2017/10/26/bitcoin-underestimated-peter...
I can think of one: if you get paid in Bitcoin, having to buy some GBPs just so you can buy a coffee or a sandwich is a hassle.
If you had the choice between a form of currency not controlled by a bunch of extremely corrupt entities that is much more convenient and cheaper in terms of storage and transactions, why would you use traditional money? I can't even transfer money to my friend overseas, it is too difficult.
At least three of those payment acceptors also make to US top 25 list for traffic (Microsoft's bing, reddit, wikipedia) so they aren't exactly zero traffic, either.
https://99bitcoins.com/who-accepts-bitcoins-payment-companie...
I don't even have a dog in this fight, as I don't own any, but this is blatant misinformation.
I just paid my 25k rent deposit using bitcoin too, it was much easier than dealing with a SWIFT wire. It took only minutes for the landlord to be confident that he’s got the money.
I’ve been living without personal bank accounts for multiple years now, and thanks to bitcoin it’s been pretty great.
And no, I won’t be crying if bitcoin drops back to $300.
Bitcoin market is still minuscule comparative to gold, and while most will point out that it doesn't work amazing as a currency, if it gets to like 50% of the current gold market, it is going to be worth a lot.
Gold will cease to be meaningfully scarce if we ever mine an asteroid or something like this, but the barriers to that are obviously somewhat higher.
Am I missing something or is the hacking part nonsense?
Yes, bitcoin has uses. (Including some cool, elegant and potentially very significant ones.) But despite the troubled state of the world, it does not appear to me that anything has happened that would justify the current ongoing explosion in price.
For an example of a mania in action, take a look at the price spike in tulip bulbs in the early 1800s: http://www.thebubblebubble.com/tulip-mania/
People don't think that the network today is +17% more valuable, but rather that the chance of Bitcoin going to zero in the next 20 years is 17% less.
Institutional investors building positions in Bitcoin makes a strong case for long-term viability, because if the govt tries to mess with something in everyone's mutual fund, the financial lobbyists will push back strongly.
I'm not really taking a position on whether its a bubble or not, though. My gut says yes, but it also said so back when it was $5 (having risen rapidly from nothing to "break the dollar", then up 5x more pretty quickly).
Do we have anything new to add at each 1K step announcement?
3 years later and it looked like I made the wrong choice. I don't have $10,000 just hanging around to buy into one whole coin.
Oh well...
- Decide what you think a bitcoin could be worth in X years
- Multiply that by the probability that outcome occurs
- That's your 'fundamental' price
Ex. if you think bitcoin has a 10% chance of being worth $100k in the future, it is rational to buy at prices up to $10K.
(some time-value of money handwaviness, but can be a useful way to look at things. ideally should be compared against other investments)
Bitcoin can be broken up. You can buy 0.01 BTC for $100 if the price is $10k.
A few years ago I brought a little bit of altcoin and 'believed' in it. I only put a small amount but I still was nervous spending money on some 'pretend' digital asset. Within a few days it was worth half what I started with. Thinking I was in a low point of the chart, I invested a little bit more.
It then dropped again, so much I lost around 80% of the value within a week.
I then declared the money lost and saved my private keys.
Fast forward to the beginning of this year, I randomly picked up my private key from a backup drive that I was going to wipe and decided to check it's value.. around £15
As it was such a little amount I decided just to cash it out, buy a pizza and continue with my life. However, as it wasn't so straight forward to just 'cash out' I left it.
A few months later I hear the news that bitcoin is rising so checked on my altcoin (because the altcoin charts followed closely to the bitcoin charts), and there you go, I tripled my initial investment. I still declared the coins 'dead' so wasn't worried about losing it, but converted them into bitcoin as that felt most secure to me. The conversion lost me some percent but I stuck it out and have had 0.1BTC in my wallet since.
It's nice watching my little amount go up. It's not a deal breaker if I lost it, but it's now more 'alive' than 'dead' to a point I have started thinking about converting it into fiat and enjoy a good Christmas. But there is that little bit inside me now, that refuses to listen to my 'the coins are dead, and I wouldn't really lose anything' mentality which is unfortunate because I feel as the price goes up that feeling will cement harder to a point I would never cash it out.
Other than buying purely for speculation, does Bitcoin really have any purpose right now, at scale? Geniunely curious.
That's huge. Bitcoin is to money what the internet was to communications.
It offers massive, tangible benefits. Money that is not controlled by corrupt institutions completely changes the game.
There is an entire industry being built around it. Thousands of engineers are creating new businesses as we speak.
It has different properties to stocks. The more people that convert their money to bitcoin, the more use it has. This is a basic property of currency. While people will say you can't buy much with it now, the very fact that massive amounts of people are now acquiring bitcoin gives incentive to people to start accepting bitcoin as a form of payment.
Most governments can now no longer make it illegal. The horse has bolted. By the time it is made illegal, millions of people will have bitcoin and you will be committing political suicide. They will try to regulate it in a way that benefits large corporations though.
I believe the transfer of money away from questionable stocks like facebook, into something based on real value like bitcoin, will crash the share market.
It's certainly enough to be an everyday currency for the people who want to use it as an everyday currency at the moment, and Lightning Network will expand the capability massively.
Ha. Wait and see.
I realise that I haven't been clear.
The point I was trying to make is only that you don't need for Bitcoin to be a replacement to visa in order to justify current skyrocketing valuation.
I would venture that Bitcoin's censorship-resistant store of value use case is enough to justify current valuation.
Cash is used for some pretty shitty stuff too, so are credit cards, and checks, and just about every other form of payment.
And funnily enough, Bitcoin is about the dumbest thing to use for illicit things, as it's so easily trackable and records of the money's movement is forever carved into the blockchain (so even if it takes someone 10 years to track the money, or even realize it needs to be tracked, it's still going to be there).
But what about the valid and legal use cases of:
1. paying for goods and services without having to give the company i'm paying access to my account information in a way that they can charge more whenever they want, or lose my information and put my financials at risk
2. Receiving payment for goods and services in a form of money that you don't need to worry about "chargebacks", "reversals", or any kind of way of taking money back after it's been sent
Combine both of those things, and I could see a very real reduction in costs of doing business in just about every area.
Do you think your answer is in the spirit of the question?
Since Bitcoin is divisible down to a small fraction, and you can trade it for whatever price you'd like, it makes more sense to me for the two parties involved in a Bitcoin transaction to take some tiny fraction of a coin and use that as a token to transfer the value from one party to another. You'd convert fiat -> BTC fraction -> fiat almost immediately.
You would have the benefit of the decentralized network to make completing the transaction much easier, and by using a fraction of a coin you'd remove risk caused by exposure to fluctuations in the value of a whole BTC.
The most prominent "fork" of bitcoin (bitcoin cash) is still only about 45 days away from having their entire history since the fork rewritten using just 25% of the available hashpower.
In a little over a month, they could re-mine every single block since the fork changing which transactions are included. And that's the most popular fork, rewriting the entire chain since the fork. If you want to rewrite just the last 50 or so blocks? You'd need something like a few days and a few percent of the overall hash power to do it.
Are you in possession of like 1% of hashpower? Then it's more than possible for you to send something like 100 BCH to an exchange, wait for the 10 confirmations, then go to work rewriting the chain from that point to "current" without your transaction.
As a random example, mining does use more energy than some nations. Why this may be a good thing in a medium of exchange/value store tends to receive somewhat hand wavy responses. If you have a great answer then it might be helpful to share it.
It's just that we've been having the identical arguments over and over for nearly ten years now. We're not advancing our understanding by re-hashing the same tired ideas.
Maybe I'll make a page with common responses to these arguments.
To use your example ... it's true that mining cryptocurrencies consumes a lot of energy. So do casinos. So does Facebook and Starbucks. So does manufacturing weapons.
The world's televisions consume a lot of energy.
Bank office buildings and the millions of bank workers who drive to work every day also use a lot of energy.
The question isn't how much energy a thing uses, it's how much value is derived per watt-hour of energy.
> 20) If the cryptography gets broken the whole thing goes to zero
I bring it up often here and each time I am met with a similar argument that you are making, but loudly ignoring is different from discussing
It's like going to a doctor and each time saying 'ugh, the tired old cancer conversation..can we just talk about something new?!' until the cancer just kills you
As for breaking the cryptography, it's been nearly 10 years now, with all the code in the public domain and massive incentives to find a flaw.
That's why some people call Bitcoin "anti-fragile" since it seems to get stronger the more it's attacked.
But of course it's theoretically possible that the NSA / GCHQ / FAPSI will (or has already) broken the cryptography. What happens then? Do miners stop until the flaw is fixed? Do they roll back to before the compromise? Does the blockchain fork into a new, fixed coin?
I guess that's the beauty of financial assets defined by open-source software. Bugs and exploits happen, they get fixed, and we move ahead on a new version.
Perhaps you are having 'the same discussions repeated ad infinitum.' because of your input stead the actual subject matter
> I guess that's the beauty of financial assets defined by open-source software. Bugs and exploits happen, they get fixed, and we move ahead on a new version.
I am unconcerned with the 'move ahead' bit
My concern is with the assets currently in the blockchain
When I warn those that ask me if they should 'get Bitcoin' that the technology is propped up on unsolved math problems
It is to protect their finances stead attempt to disparage Bitcoin
If the cryptography is broken then the entire blockchain is suspect and needs to be discarded along with the record of any assets locked in it